PDN news sources
PORT ANGELES — Gottschalks Inc., which operates downtown Port Angeles’ largest department store, will be liquidated after it failed on Monday to attract a buyer willing to continue operating the company as a retail concern.
Liquidators won the battle for Gottschalks Inc. and will shut down the company, CEO James Famalette told The Fresno (Calif.) Bee newspaper late Monday night.
Gottschalks Inc. is based in Fresno.
Famalette said Gottschalks would begin notifying employees today about what will happen. Going-out-of-business sales could begin as early as this week.
Gottschalks, founded in Fresno in 1904, operates 58 department stores and three specialty stores. It has about 5,200 employees in California, Oregon, Washington, Alaska, Idaho and Nevada.
The liquidators were one of three bidders, including another liquidator and a Chinese company, Shandong Commercial Group, that intended to keep some of the stores open.
“We tried as hard as we could to make this work with the Shandong people, but there were too many things financially, with the size of the deal, and regulatory issues, that they just couldn’t get done in time,” Famalette said from Delaware, where the bankruptcy filing was made.
Famalette told the Bee that while Gottschalks’ merchandise and other assets will be liquidated, he hopes to continue negotiations with Shandong for a post-liquidation revival of Gottschalks in some form. He was unable to discuss details of those talks Monday night.
Famalette said the group chosen by the company earlier this month to make the opening bid was the winner Monday. That consortium of liquidators includes SB Capital Group of New York, Tiger Capital Group of Boston, Great American Group of Los Angeles and Hudson Capital Partners of Massachusetts.
The same four companies also conducted the going-out-of-business sales for bankrupt retailers Mervyns and Circuit City, and were joined by two other asset-disposition companies in the liquidation of Linens N Things.
Famalette said the auction, which began at 10 a.m. EDT (7 a.m. PDT) Monday, was not concluded until 11 p.m. (8 p.m. PDT).
The auction was held behind closed doors, and the results have not been officially announced by the bankruptcy court.
The prevailing bid is due to be approved at a court hearing Wednesday by U.S. District Bankruptcy Court Judge Kevin Carey in Wilmington, Del.
Once the order is signed, going-out-of-business sales at Gottschalks stores could start the next day or Friday.
Also on Wednesday, an auction date is expected to be set to deal with Gottschalks’ real-estate assets: its leases and the store sites it owns.
The company leases the Port Angeles building at Oak and First streets from the K.O. Erickson Trust.
Gottschalks has been in the building, which originally housed The Peoples department store until 1983, since Gottschalks Inc. acquired Lamonts Apparel Inc. in 2000. Lamonts, which operated in the building from 1984 to 1999, also was in the midst of bankruptcy protection when Gottschalks acquired the 34-store Lamonts chain for $22 million.
Gottschalks filed for Chapter 11 bankruptcy in mid-January in hopes of either reorganizing its debt or finding a buyer.
The company released a statement Monday night. In it, Famalette said: “Regrettably, liquidation is now the only path for our company. We are deeply disappointed with this outcome and the impact it will have on our employees, customers, business partners and the communities we have served for 105 years.”
The original liquidation agreement Gottschalks had with the winning consortium indicated that current Gottschalks store employees may be kept on for the closing sales, the Bee reported early today.
The liquidators must identify which employees it wishes to keep before the sale begins. Those employees will remain on Gottschalks’ payroll, but liquidators may “stop using any retained employees at any time during the sale” if they give Gottschalks a seven-day notice, according to the agreement. It will be up to Gottschalks to terminate any employees that aren’t needed for the liquidation.
Some employees who stay with the stores for the liquidation sales may receive retention bonuses of up to 10 percent of their base pay, according to the agreement.
Liquidation sales are expected to be concluded by July 15.
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Gottschalks history timeline from The Fresno Bee:
http://www.fresnobee.com/local/story/1130183.html
